Topic 8 - Production Function Flashcards
What is a production function
A rule which relates quantities of inputs to the maximum quantity of output that can be obtained from those inputs
What is total physical product TPP
The total amount being produced
What is average physical product APP
Total output divided by the quantity of that input
What does the total product curve TPC allow us to do
Analyse how changing one input affects total output
What is technological change
One of the easiest ways to get more output from the same inputs is to make improvements to the production process, this is called technological change
What was the green revolution
Period of technological advancement in food production
What is efficient production
Achieving the maximum output possible from a given set of inputs
What is x inefficiency
When a producer fails to obtain the maximum output possible from a given set of inputs and given technology if they implement technology correctly
What is technical efficiency
When a producer fails to obtain the maximum output possible from a given set of inputs because of his or her choice of production methods
What is economic efficiency
When a producer uses the least cost combination of inputs to produce a certain level of output
What efficiency do firms Face If they are operating on the production function
They don’t have any x inefficiency or technical inefficiency but they could still be economically inefficient
What is cost minimisation
Firms finding the lowest cost of production for any given output
What is the isoquant curve
Shows what resources a company needs to produce different levels of output
What is an isocost curve
Shows the costs of these inputs
What is the name of the point where the isoquant and isocost curves are tangent
The cost minimising point
